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Profit from the Pros By Kevin Matras Executive Vice President
Stocks Up For The Week On Better Than Expected Jobs Report
Stocks finished mostly higher on Friday with all of the major indexes closing up for the week.
In doing so, the Dow extended their winning streak to 6 days in a row.
The S&P did the same while making another new recovery high in the process. Their higher weekly close also makes it two weeks in a row for them.
While the Nasdaq's decline on Friday ended their winning streak at 7 days, their higher weekly close makes it two weeks in a row for them as well.
I should also mention that the small-cap Russell 2000 Index made an upside breakout on Friday, jumping to a new recovery high on increased volume. And they too were higher for the week for the 2nd week in a row.
The big news on Friday, of course, was the better than expected Employment Situation Report which showed we gained 1.763 million new jobs last month vs. estimates for 1.675 million. The unemployment rate also beat expectations which fell from 11.1% to 10.2% vs. views for 10.5%.
That makes it three months in a row of better than expected job gains totaling 9.279 million.
As you know, there was some concern going into Friday's report of a softer number, given the ADP report two days earlier which estimated job gains of only 167K. But as we noted, ADP's numbers are often markedly different from the official jobs numbers, and that was true again this time.
In other news, earnings season continues to impress. And we'll get another heavy week of earnings this week with 1,356 companies on deck.
Unfortunately, talks broke down in Congress for the fourth coronavirus relief/stimulus bill.
But the President had said, absent a deal, he was prepared to offer aid through executive orders. And after the talks broke down, Treasury Secretary Steve Mnuchin said he would recommend to the President that he indeed sign executive orders to provide the badly needed relief.
The market seemed to like the news that some form of relief was coming, whether it be thru a bill from Congress or an executive order from the President.
And on Saturday, the President signed four executive orders: 1) $400 per week supplemental unemployment payments, 2) payroll tax holiday for the rest of the year for those earning $100,000 or less, 3) an extension of student loan relief that also goes thru the end of the year, 4) and a halt to evictions.
Separately, there is some concern over what China will do in retaliation for the U.S. sanctioning 11 Hong Kong and Chinese officials for suppressing pro-democracy protests.
And that's on top of the administration's threats over banning China's TikTok and WeChat apps. The ban won't go into effect for 45 days. But China has warned of consequences if they go thru with it. We shall see.
In the meantime, the U.S. economy continues to recover, as the reopening (bumps and all) continues to expand.
That's why analysts are calling for unprecedented growth for the remainder of the year.
And why it looks like stocks have a lot more upside to go.
So make sure you're taking full advantage of it.
See you tomorrow,
Executive Vice President, Zacks Investment Research
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